RIYADH: Saudi Arabia’s construction market could return to pre-pandemic levels this year, with the Public Investment Fund, or PIF, pushing for more projects.
In 2021, the contract industry saw a 78% increase in business compared to 2020 and this upward momentum is expected to continue in 2022, according to the US-Saudi Business Council.
Last year’s increase, however, was still below the levels seen by the industry in 2013 and 2014 during the oil price spike, said Albara’a Al-Wazir, a leading economist at the USSBC, at Arab News.
The surge is primarily the result of PIF spending on projects like NEOM and The Red Sea Development Co. as well as increased capital investment by Saudi Aramco, which plans to further expand its oil and gas production capacity. gas.
“The region will see considerable medium and long-term investments with government entities such as the PIF and policies such as the National Investment Strategy injecting liquidity into the sectors will lead to additional growth,” Al-Wazir said.
“The National Investment Strategy plans to inject a substantial amount of SR5 trillion, even while the PIF has planned to inject SR150 billion per year until 2025. All of this will translate and impact on the growth in construction activities,” he added.
Boosted by improving macroeconomic fundamentals and the resurgence of the industry post-pandemic, construction contracts awarded to Saudi Arabia reached SR142 billion ($38 billion) in 2021, with the fourth quarter registering its only SR70.2 billion, the highest in nearly six years, the USSBC estimated.
“We have seen an increase in contract awards for five consecutive quarters, which represents very strong growth for the construction sector,” Al-Wazir added.
The USSBC Contract Awards Index, or CAI, rose to 209 points in the fourth quarter of 2021. For the first time since the first quarter of 2020, the CAI passed the 200 point mark, bolstering confidence in the growth outlook for the l ‘industry.
In terms of sectors, the oil and gas sector awarded contracts worth SR34.9 billion in the fourth quarter of 2021, followed by the power sector at SR12.1 billion and real estate at SR7.6 billion.
